Spend Matters Premium Content:Procurement

The victory of left-wing party Syriza in this week's Greek elections could have far-reaching implications well beyond Greece itself, and at the extreme, could be the beginning of the end for the Euro. It is important, therefore, that anyone involved in procurement and supply chain activities where currencies have some relevance does, at the very least, keep an eye on events and thinks about the implications of the various possible outcomes following the Greek election. However, we should also note that many observers have been predicting the breakup of the Eurozone for at least 3 years now. So nothing is certain.

Today we wrap up our "Evolution of the Operations, Procurement and Sourcing Consulting Market" PRO series, written by Jason Busch, founder and managing director, and Pierre Mitchell, chief research officer. In this installment, Jason and Pierre share the best strategies to get the most from consulting firms in the current climate of the procurement and operations areas. They share a number of best practices they have observed by “smart” consumers of consulting services.

In most procurement organizations, spend analysis is in place to support corporate procurement groups performing top-down sourcing and category management. Larger and more progressive organizations may also have a “customer management” process for aligning to internal budget-owning stakeholders to make sure they are gaining value from their supplier spending – and also getting the eye from procurement. In earlier installments of the series, we discussed how to provide spend information to support these processes. Unfortunately, FP&A is a process that is mired down in preparing budgets rather than the more strategic role that it should occupy.

We recently started our analysis of the services procurement market by looking at the evidence showing how the staffing marketplace is failing procurement organizations. Today, we turn our attention to the “why” and the various sets of factors that are holding back organizations from gaining more value from their services procurement spend. This value includes greater savings, of course, but also reduced risk, increased compliance, better talent management and time to focus on innovation, continuous improvement and business outcomes. In this Spend Matters PRO analysis, Jason Busch, founder and managing director, goes beyond the standard “fox watching the henhouse” issues with the traditional MSP/staffing market. Finally, to conclude this series, we will offer a prescription for changing the market from the inside out with procurement-led initiatives.

In the previous 10 installments of this series, we’ve discussed how (and why) to build a foundational capability to analyze spending history and then identify a myriad of opportunities to improve not just sourcing outcomes, but also opportunities to improve processes, master data, policies, etc. These are opportunities for procurement as well as the spend owners themselves. What this transformation means is that we begin to focus on future spending in order to best shape it and gain more value. Rather than just looking in the proverbial rearview mirror to see black smoke, we begin to look forward with our passengers and discuss where we need to go and what type of vehicle and fuel is needed for the journey.

With apologies to Meghan Trainor, it’s not all about the bass, at least not when it comes to P2P success and integration. Rather, it’s all about data quality. Successfully integrating P2P solutions into back-end ERP systems (and other applications) is not just a question of file formats and structures. Nor is it just about aligning objectives between stakeholders through the workshop model we advocated for earlier in the first installment of this research brief. In this Spend Matters PRO analysis, Lead P2P Analyst Xavier Olivera tells us how to think through all the key data quality issues in implementations and also provides his list of overall key success factors for P2P and ERP integration.

In the next 2 weeks, Spend Matters will release a survey report examining differences between how companies manage services procurement and supply chain efforts (with a focus on contingent labor) relative to indirect and direct materials. We are looking at the study, which is based on a sample size of 144, as the first major effort that has been made toward covering the services procurement market the way in which it needs to be covered, compared to the silo-based approach that we (and others) have taken in the past. In this Spend Matters PRO research brief, Jason Busch, founder and managing director, offers a preview of some areas of our research findings and begins to point the finger at the existing solution provider ecosystem for coming up short in delivering comparable procurement solutions to direct and indirect spend.

We continue our coverage of the Procurement Leaders Forum event in Singapore, which I attended at the end of October. In Part 1, I shared information on the awards given out at the event and other tidbits like how growth optimism is strong in Asia. Here in Part 2, I summarize some of what the speakers shared during the event.

In this two-part Spend Matters Plus analysis, I will share my impressions and takeaways from the two-day 4th Procurement Leaders Forum event in Singapore held the last week of October. Compared to Procurement Leaders (PL) events in the US (perhaps anywhere in the world), the variety of nationalities gathered at the event last week was quite staggering – a mini-UN of sorts, except far more productive. ProcureCon also holds an annual Singapore event. But, subjectively speaking, I think PL has managed to gather a higher caliber audience – both events are worth attending (and several attendees were familiar faces from the ProcureCon event. In many ways, Singapore is a small place), but they do have a different style. If you want to talk with procurement CPOs from India, Japan, Singapore, Malaysia, Vietnam, China, etc., as well as expat CPOs from the Middle East, Australia, the UK, the US, Germany, France and more, this was a good place to do so – quite an effective use of time.

I saw a blog post a few months back asking the question about how chief procurement officers (CPOs) spend their time. Although the post was really just a Trojan Horse for campaigning a full-blown “benchmarking” survey, the topic is a good one to explore, and there is already some solid quantitative research on the topic. For those of you who have children, you may be familiar with Richard Scarry’s book What do People Do All Day. It’s a wonderful illustrated children’s book dealing with all of the various roles that people play in a small town. Of course, I didn't see any procurement people, and I was envisioning a small, dimly lit negotiations room where supplier people were, ahem, “sharpening their pencils.” But, there was a firefighter, so perhaps that is close enough.

In the last six installments of this research series, we’ve talked about the numerous ways to mine and utilize payment history data to create value. But, you can't really do spend analysis without analyzing purchase history too. In other words, we are now going to analyze what you purchased rather than just whom you paid. In our next two installments, we will talk about more granular insights into receiving and upstream into requisitioning. And only then we will get into how to automatically classify line item details into a spend category taxonomy and cross reference that spending data back to contracts. So, for now, we are just going to focus on purchase orders.

In this Spend Matters Plus article, we dive into some of the details at what is likely the largest implementation of “guided buying” currently underway in the world. What’s interesting though is not just the scale of this global implementation, but its approach. The firm has 10-digit spending across dozens of countries with more than 100,000 active users who access a unified catalog, category-specific “smart” requisition templates, specialized punch outs to category-specific systems and integration to internal shared services centers. What’s also surprising is what solution provider is actually powering it.